in the Journal of the American Medical Association cautions that early signs of inability to manage finances are an inability to count money, trouble paying bills, concerns about stolen or missing money, calls from financial institutions about problems with accounts and financial abuse.Advance planning is critical to avoid the dire consequences of cognitive impairment. Since every situation is different, you need to discuss this issue with your attorney. A common recommendation is a durable power of attorney that names a designated agent who is authorized to take over your finances if you become incapacitated. If the power of attorney is not “durable,” it will automatically terminate once you become impaired, which defeats its purpose.

Another option is a “springing” power of attorney, which becomes effective only once a determination of impairment has been made. Usually the diagnosis has to be from one or two qualified physicians. The problems with these requirements are that the diagnosis can be difficult and doctors are often reluctant to make it. For these reasons, many attorneys prefer a durable power of attorney that does not require the satisfaction of these conditions.

If you have significant assets, you should consider appointing a trust company to manage your assets in the event of impairment. Your attorney should consult with the legal department of the trust company to be sure the power of attorney you execute is in a form acceptable to them.

You worked your entire life to save for retirement and to leave a legacy to your loved ones. With a little advance planning, you can protect your assets from the hidden danger of cognitive impairment.